Meet New Zealands IFSO Karen Stevens

Make the most of complaints, and if they point to a systemic problem, fix it. That’s the message New Zealand’s Insurance & Financial Services Ombudsman (IFSO) Karen Stevens has for the country’s insurers after 22 years of listening carefully to unhappy consumers.

Stevens heads a dispute resolution scheme that fields just under 4,000 inquiries a year, with about one tenth of them investigated as formal complaints. 

The IFSO Scheme is industry-funded and its service is free for consumers, with a cap of NZ$200,000 on the financial value of any complaint it pursues.

Insurers are the focus of 95 per cent of complaints overall, notwithstanding the expansion of Stevens’ office in 2010 to cover other non-bank financial services.

Of 322 formal complaints in 2019, 225 were general insurance matters and 80 related to health, life and disability insurance. By comparison, just 12 were complaints about financial advisers and two concerned financial services.

LISTENING IS THE KEY

Insurers could help themselves by listening more effectively to disappointed policyholders, says Stevens.

‘One of the primary comments we hear from people who complain to us is that they weren’t listened to when they complained to the insurer.

‘Listen and learn. That’s the focus of the training we offer our participants. What can you learn from complaints? How can you do things differently to avoid this happening again?’

A BETTER WAY TO SOLVE DISPUTES 

Stevens studied arts and law at Victoria University in Wellington, completing a double degree in 1986 before travelling overseas and working in the United Kingdom for two years.

Back home in New Zealand, she worked in litigation with commercial firm Simpson Grierson. Despite loving the work, Stevens came to believe that many people could not resolve their legal problems by taking them to court. To do so takes too long, costs too much and comes with no guarantee of success. 

She set up a boutique law practice, Stapleton Stevens, with her husband and qualified as a mediator and arbitrator, with a view to finding better solutions. When the position of Insurance & Savings Ombudsman (ISO) was advertised in 1998, she applied and was delighted to be appointed.

FAIR, BALANCED AND INDEPENDENT

In 2010, the ISO Scheme expanded its membership to include a wide range of other financial service providers, and five years later it rebranded as the IFSO Scheme — with Stevens still at the helm.

Twenty-two years on, she rates her proudest achievement as sustaining a fair, balanced and independent approach.

‘It’s incredibly important to us to be able to make decisions the industry may not like but accepts because of the reputation we have created and the respect we have earned,’ she explains.

‘Consumers don’t have to accept our decisions, but it’s always rewarding when they express satisfaction with the process, particularly if they didn’t get the outcome they wanted.’

Along the way, Stevens has augmented her training and experience with a Master of Laws degree from La Trobe University in Melbourne, majoring in dispute resolution

LEADING FROM THE FRONT

Stevens describes herself as a decision-maker with the flexibility to listen, consider other points of view and apply the law to reach an outcome.

She says cases referred to the IFSO Scheme have become more complex over her time in the role — a change she attributes largely to insurers improving their handling of basic complaints.

Nevertheless, her office still receives inquiries from customers who have confused their market value cover for replacement cover or believe that many years of paying premiums entitles them to cover for everything.

THORNY ISSUE OF DISCLOSURE

Particularly concerning are misunderstandings that lead to insurers avoiding claims over non-disclosure of material facts — still the biggest single source of complaints about health, life and disability products.

Not only is the policyholder left without cover in what may be very distressing circumstances but having a non-disclosure event in their history may make it difficult to obtain future cover.

Stevens is hopeful that a long-overdue review of insurance contract law will correct the current inequity as draft documents put more of an onus on insurers to ask the right questions, rather than expecting consumers to understand what underwriters believe to be material. The review also aims to make insurance contracts easier to understand for consumers.

BALANCING ACT

This year, the IFSO Scheme will continue its efforts to develop resources that help participants improve business practices and avoid situations and behaviours that lead to complaints.

‘Our biggest challenge is to stay relevant and move with the times, which means understanding changes in products, technology, legislation and consumer expectations,’ says Stevens.

‘We want consumers to be able to access the IFSO Scheme more easily and, ultimately, be able to make more informed choices.’